How to Grow Your Etsy Business

I started out in business making furniture. I had no idea about furniture, or business, or sales, or anything like that. I listed my first few items on Etsy (I just stumbled upon it – I had no idea what it was) and got my first few sales.

Now it’s seven years later. We’ve sold millions of dollars in furniture. I have employed lots of people over the years, and I now have business partners who run the business so I make money from it but I’m mostly involved in other things.

When I started out the furniture and photographs were extremely amateurish, and to be perfectly honest I have no idea why people would have bought them. Now, my furniture is in showrooms throughout the UK, and we continue to make products for some of the biggest commercial projects in the country. We’ve just recently made stuff for Oxford University, The Open Championship, and various famous film production companies.

It’s been ups and downs (mostly downs, it seems sometimes), but I stuck with it and even if it’s no IKEA it’s not only a good living but I’ve learned an awful lot about business. The latter is what I think will be most valuable in the long run. So this article isn’t about how you can ‘get rich from Etsy’ – it’s about growing your business so that it becomes a proper standalone business and not just a shop tied to the fortunes of Etsy.

So let’s get down to it.

Here are some of the keys ways you can grow your Etsy business:

1. Don’t rely on Etsy if you want to grow your Etsy business.

2. Don’t rely on Etsy if you want to grow your Etsy business.

3. Don’t rely on Etsy if you want to grow your Etsy business.

For sure, use Etsy – work out what sells, what doesn’t, work out the basics of how business works. Why would you say no to easy money? But if you rely on Etsy for a large proportion of your sales then you are not only putting all your eggs in one basket but you are missing out on a lot of transferable skills that you will need to run a non-Etsy business. Don’t get me wrong – I know a few people who have made millions from their Etsy businesses, but I also know an awful lot of equally clever people who are more creative who haven’t.

My main issue with relying on Etsy: Sales/marketing/advertising – call it what you like, but it’s basically getting people to buy your product.

Sales and marketing are absolutely essential fields for any business person to understand. Presumably, since you’re reading this, you have an Etsy store and you make things. So maybe you think that you just need to make a great product and that’s the main thing. It’s not. A great product does not mean a great business – they are totally different things. Look at all the products and services you use that have room for lots of improvement – just about everything. Their product is not perfect and yet you and millions of others are buying it. Your product is 100x better, your customer service is better, yet you’re not yet a billionaire. What’s going on? Sales and marketing is a large part.

The aspects of sales and marketing that you get through Etsy are distorted – Etsy deals with advertising, there’s no outbound sales, and any optimisation or differentiation you do is mostly within the boundaries of Etsy’s internal systems rather than the real world. Etsy takes care of the advertising for you. In addition to their general advertising like TV ads which drive customers to the Etsy site rather than a specific shop, Etsy also allows you to pay a bit extra to advertise each of your products (by the way, this is often through Google Ads, which you can do yourself – more on this later).

Etsy gets a cut of everything sold: they don’t care that you sell something, they only care that they sell something.

Etsy is fickle. Their algorithms might change all of a sudden – they might favour a new competitor, for example. When I first started my business I had lots of sales straight away and they were ever-increasing. I could hardly keep up. I was then in an accident and had to apply the ‘holiday mode’ for several months. When I resumed, there were no sales. None, for a long time.

This Etsy sales graph doesn’t go back as far as I would like to show, but you can at least see the dramatic change of sales with time. Doubling one year, halving the next. My guess as to what happened is this: It’s in Etsy’s best interests to show listings from shops that sell well – let’s say my total sales were $5000, and I had been selling for 50 days. That’s $100 per day, which Etsy’s algorithms might consider good. I think when I entered holiday mode the calculation still applied: My total sales were $5000, but I had been selling for 100 days. That’s only $50 per day, and there are stores that are making more so why would Etsy not show them instead? That’s just a guess, and it doesn’t really matter – the point is, it’s fickle, and personally I don’t think you should rely on it long term, or use it to make big decisions (like taking out a loan).

You need to ask yourself if you want to spend your time trying to work out how to get Etsy’s ever changing internal systems and competitive landscape to favour your store, or instead spend that time making your business so that it’s able to grow and survive independently of Etsy.

By the way – back at the start, I had a list of competitors on Etsy and I’d monitor their sales, jealous of how much they were selling. I checked the list again recently – out of 10 Etsy businesses, only two are still trading, and their sales have clearly not continued their initial stratospheric trajectory. These were all stores that were selling probably millions of dollars worth of their products per year, and many of them have gone into liquidation.

So, by all means use it for initial or background income, but if I were you I’d find another way to market your business to diversify your income.

So how to grow your Etsy business elsewhere? Let’s say you make a website.

A website would be a natural choice to supplement Etsy – you could use the same photos, website copy, etc. (A website is an obvious one but obvious doesn’t necessarily mean best – maybe your products look great in real life but you’re crap at photography?)

But let me be perfectly clear if you want to build a website:

IF YOU BUILD IT THEY WILL NOT JUST COME.

Do not rely on SEO (search engine optimisation – your website appearing on the top results in google if you just type the product description in just the right way). Do not think you are so clever that an Instagram post will go viral and thousands flock to buy your stuff. Do not think your product is so wonderful that people will magically arrive on your website. They will not. They. Will. Not.

Regardless of what you do, to grow your business you need to have some way to find people to notice it – you need to advertise in some way.

Let’s say you sell your product for $100. Of that $100, $30 is material costs, $20 pays for your premises, electricity, and labour. That gives $50. So as long as you spend less than $50 on marketing then you’re making a profit. So maybe you spend $30 printing 30 leaflets and one person who receives a leaflet spends $100. You’ve made a profit of $20.

Now of course you’d much rather not spend anything on advertising, or spend $1 on 1 leaflet and that person making a purchase. But there’s a balance you have to strike in all things – yes, you’re going to make $49 profit instead of $20, but you can probably only do this a couple of times. So maybe in the course of a month with the 100% success rate you sell two items, making $98. But with the mass-mailings you sell 50 items, giving $1000 profit.

New businesses shy away from spending money on advertising because it seems like throwing money away. But you’re only wasting money at first, until you find out what sort of return on investment you’re getting. Once you’ve established that you get a $100 sales on average every 30 leaflets then you can increase spending (i.e. send more and more leaflets) until the $100/30 correlation starts to lose effectiveness (maybe once you’ve dropped a leaflet through everyone’s door in your neighbourhood you need to go to a different town, where it’s less effective).

So, don’t be scared to spend money (or time) on advertising – find a means of advertising that works and is repeatable, and do that until you can’t grow that any more.

There are lots of ways you can advertise.

Some ways of ‘advertising’, are:

Etsy – they get 10% or so of everything they sell, and in return provide their marketplace and the traffic. Retailers – you sell products to them for a discount and they add on their margin. The discount you give is for them to be a customer. Retailers themselves pay advertising by paying a premium for better store locations – a mall with high traffic, wealthy customers charges higher rent than one with no customers in a poor area. Craft fairs – you pay a fee to set up your stall, and in return they provide the traffic. Sales person – they need to get paid. Conventional advertising – newspaper ads, billboards, TV ads. Online advertising (Google, Facebook Ads) I got away from Etsy and grew my business initially by using Google Ads. I was nervous about wasting an initial $50, but found that spending that got me a sale of $200. Over time, I ramped up the advertising and have now spent hundreds of thousands of dollars on Google Ads. Over time I improved my marketing so instead of getting $200 for every $50, I get $250. I don’t have hundreds of thousands of dollars cash, but I understood that the correlation would hold. I ended up getting into the same mess with Google as with Etsy, though – too dependent on one thing.

Spend on Google Ads for one account. £137k is about $150k. I don’t have this money but I know if I spend it I will get it back. Now, for our furniture I have a multi-channel approach which includes Etsy (though very little sales), online advertising, products in retailer showrooms, outbound leafleting/emails, etc. It takes a while to set this up, but it significantly increases the robustness of your business.

Q: What is your advertising budget?

A: Your advertising budget is infinite (in theory… you know that if you spend $1 you get $10 back within two weeks, or $100 you get $1000, so your advertising budget for the year might be $10,000 and you can budget for $100,000 sales even though you don’t have $10,000 to spend just now).

By the way – it’s not infinite in practice. Someone who sells advertising (a magazine, Google, etc.) will tell you their audience is far higher than it is and this will encourage you to spend more. They’re quite happy for you to spend more and more on advertising, but if you spend too much your correlation will start to break down.

So… don’t be dependent on Etsy or any other single company to grow. You need to advertise somehow.

Top tip: If you’re going to make a website yourself use Shopify. There are other options like Woocommerce where you can save a few pennies, but your time is too precious. You’re running an Etsy business, you’re not a web designer. Focus on what you need to focus on. Shopify is the largest website host, and so there is the biggest range of add ons and plugins available for it.

This holds for anything in business – your time is valuable. It literally has value – it costs money. If you don’t appreciate this you’ll never be able to grow your Etsy business as you’ll never be able to replace yourself with an employee because you won’t be able to pay them enough. So, value your time.

Finally, ‘advertising’ vs. ‘marketing’ etc. – some sticklers might point out that my definition of ‘advertising’ is not 100% the same as their definition. It doesn’t matter, I think you get the point. You need to find a way to find people to buy your stuff.